The term business loan is very general and can include most loan options offered to business owners. However there are basically 2 types of business loans;
1. Business Overdraft
A business overdraft is a business loan account linked to one of your business trading accounts. The balance of the account can fluctuate with deposits and withdrawals and you only draw down on funds (& pay interest) as you need to.
A business overdraft can be secured by either the director’s personal assets/property/home, or by real estate owned by the business.
2. Business/Term Loan
A business loan is a separate term loan provided to the business for a specific purpose or need. It could be used for buying equipment, software, business expansion/fitouts, or even to fund cash flow during short term rapid growth.
Just like a business overdraft the business loan can be secured by either the director’s personal assets/property/home, or by real estate owned by the business. If the business has a proven track record (2+ years), then some smaller business loans can sometimes be provided unsecured but with director guarantees.
For more information refer to Types of business loans and what business owners want